A development has 28 lots that have been in inventory for four years. The market will...

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A development has 28 lots that have been in inventory for four years. The market will limit sales to five lots a year. Lot prices will be stable for three years but then increase by 5% per year. There are various values on the lots, but the average value today is $50,000. The lots are priced at $100,000 each, and this is the reason none have sold. The real estate taxes are $200 per lot for the inventory of previous year. Sales commissions are 5% of gross sales. Since the lots are already built, the market appears to be recovering the entreprenurial incentive is only 15% of the gross sale price. There is $25,000 of deferred maintenance and about $1,000 per year in ongoing maintenance. What is the value of all 28 lots today if the discount rate is 10% and there is annual accounting? O $812,000 O $1,461,769 O $837,000 O $1,145,000 4 A development has 28 lots that have been in inventory for four years. The market will limit sales to five lots a year. Lot prices will be stable for three years but then increase by 5% per year. There are various values on the lots, but the average value today is $50,000. The lots are priced at $100,000 each, and this is the reason none have sold. The real estate taxes are $200 per lot for the inventory of previous year. Sales commissions are 5% of gross sales. Since the lots are already built, the market appears to be recovering the entreprenurial incentive is only 15% of the gross sale price. There is $25,000 of deferred maintenance and about $1,000 per year in ongoing maintenance. What is the value of all 28 lots today if the discount rate is 10% and there is annual accounting? O $812,000 O $1,461,769 O $837,000 O $1,145,000 4

Answer rating: 100% (QA)

Answer Value of all 28 lots today Present value of all future cash flows from the sale of the lots Assuming that the lots are sold evenly over the nex... View the full answer